INCOME TAX BILL

Taranaki Daily News, 4 March 1933, Page 9

INCOME TAX BILL

PASSAGE BY THE HOUSE BUILDING SOCIETIES, EXEMPT SINGLE MEN’S DEPENDENTS APPEAL IN HARDSHIP CASES NO TRAVELLING CLEARANCE • By Telegraph—Press Association. Wellington, Last Might. The Land and Income Tax Amendment Bill was passed by tile House of Representatives to-night. The Minister of Finance said he was prepared to arrange for the exemption of building societies. He withdrew the clause requiring persons about to leave the country to have a Clearance from the collector of income tax. The Minister defended the banks, which were a lucrative source of income tax, and said each bad debt would be verified before exemption. Single persons with dependents will have the usual appeal in case of hardship, the Bill not being amended in that direction. The savings banks are to discusi; their position with the Minister. The debate on the second reading of the Bill was resumed in the House this •afternoon.

The proposal to remove exemption from building societies .and savings banks would strike a severe blow at those institutions, said Mr. J»- Hargest (Co., Invercargill). Building societies were finding it very' difficult to make ends meet at the present time.

Mr. J. A. Lee (Lab., Grey Lynn) asked whether commercial travellers would.be compelled to pay income tax on the accommodation allowance they received while travelling. It might be possible for that position to arise under the terms of the Bill.

Approval of the concession granted the banks with respect to bad debts was expressed by Mr. A. D. McLeod (Cd., Wairarapa). He said justice should be done to the banks as well as to other sections of the community.

Mr. C. Carr (Lab., Timaru) agreed With the principle of a bachelor tax and a spinster tax, but he considered an allowance' should be made for dependents on single persons.

Many financial and commercial institutions would have had to. go into liquidation if it had not been for the. assistance they received from the banks, said Mr. W. A. Bodkin (Co., Central Otago), who entirely agreed with the proposal to exempt banks’ bad debts from taxation. HAWKE’S BAY BUILDING.

If there was a case for concession to the banks, there was surely a much stronger case for making allowance to the Hawke’s Bay building societies-with respect to losses they sustained as the result of the earthquake, said Mr. W. E. Barnard (Lab., Napier).. Mr. J. A. Nash (Co., Palmerston N.), expressed the opinion that the Government had made/an exceptionally good bargain in having the bank overdraft rates reduced in return for exemption from taxation on the banks’ bad debts. It had given the banks only what every other business man in New-Zealand enjoyed. Mr. M. J. Savage (Lab.,. Auckland West) said no exception could be taken to the exemption from taxation on bad debts, but so far as taxation of banks generally was concerned he thought there was necessity for some improvement. He suggested the Government should not too readily accept the bankers’ own assessment of the value of their assets and liabilities. The Government insisted on checking the assessments of other taxpayers and he proposed to give the House an opportunity at a later stage of voting on the question whether the banks should be taxed on realities or on the imagination of-the bankers themselves.

Mr. W. E. Parry (Lab., Auckland Central) contended that the banks were ordinary business concerns whose shareholders were out to make as much profit for themselves as possible, and rightly so. They had made three times as much profit since 1918 as they did in pre-war years and were now . growling about taxation. He considered the banks were doing all right for themselves. Mr. A. E. Jull (Co., Waipawa) urged the Minister not to impose income tax pn building societies and thus further increase the difficulties of the Small investor whose funds' were sunk in them. Mr. H. G. R. Mason (Labi, Auckland Suburbs) alluded to the £5O income tax allowance that was granted for wives in the Bill, and he expressed the hope that the Ministers would send members away well prepared to meet their wives who might probably resent such a low computation of their value. Replying to the discussion on the second reading, the Minister of Finance (the Rt. Hon., J. G., Coates) reminded the House that the banks of the Dominion provided the country with 11J per cent, of its income tax. This was a very lucrative source of income indeed. In making an impost on the banks, Mr. Coates said, they had first to consider how the tax reacted through the banks and whom it eventually would hit. They found it would strike down and. hit men whom Parliament had been trying for years to assist—the investor and depositor.

The banks in New Zealand had to work under charter, and Mr. Coates considered that a very good thing indeed. The crying out against the banks had become almost a mania, he contended, and it was alleged the banks were grinding every penny out of everybody. Hr. Coates asked the House to compare the banks of New Zealand with those of other lands. There were bank crashes in many places. BANKS WELL FOUNDED. In the past the Dominion Parliament had seen that the banks here were on a sound foundation, for which “we can thank our lucky stars.” If that had not been the case New Zealand might be having bank crises now. New Zealand had followed the English system, and Mr. Coates was of opinion that it was better than that followed in the United States. Investors in New Zealand knew they were safe. Mr. Langstone: This is not the best of all banking systems. / Mr. Coates: I would like to know f where there is a better one. V, New Zealand to-day had six strong, sound banks in which the country could have confidence, Mr. Coates said. They could help everyone in the Country, and through their assistance the Government had been able to keep up the credit of the country. The question of bad debts. Mr. Coates said, was entitled to thorough investigation. The Government had given very careful consideration to the exemption from taxation on bad debts because it knew it would become a political question as soon as it was brought to the floor of the House, but the. Government felt it had been unfair in the past to the trading banks of the Dominion in i taxing-them on tins account. Mr. Coates assured members that the Income Tax Commissioner could verify

each bad debt before exemption was granted and that official would have to be satisfied that they were really bad debts before action was taken. Mr. Coates had no doubt whatever that he was doing" the right and fair thing and tiiat such exemption Would be in the interests of the people trading and dealing with the banks. Mr. Coates intimated that he was prepared to amend the, clause of the Bill dealing, with, taxation of Building societies to the effect that they would be exempt from taxation. Mr. F. Jones (Lab., Dunedin South): What about sayings banks? Mr. Coates: They will not come into it ~ • , The Bill was read a second time and the House proceeded to discuss it in committee.

The debate on the short title proceeded until the supper adjournment. Mr. A. Harris (Co., Waitemata) said he had received a communication froin the Auckland Savings Bank which 'expressed some alarm at the proposed taxation on savings banks. That bank had given its profits to charity and other purposes and would be placed in a somewhat awkward position if taxed'on such profits. Mr. Coates assured Mr. Harris that if the profits were given away the bank would not have to pay income tax on them. ■ • . ■ • ■ ’ CONSIDERATION OF HARDSHIP. The short title was passed at 10.20 p.m., when the Chairman of Committees (Mr. S. G. Smith) intimated that the Prime Minister wished to report progress to allow of another measure being circulated. The Leader of the Opposition, however, suggested that the House ;should proceed with the committee stage of the Land and Income Tax Bill in order that the measure should be put through its stages. This was agreed to and the House continued the discussion in committee.

Dealing with the clause that made special exemption where a taxpayer was married, Mr. W. Nash (Lab., Hutt) moved that single persons with dependents be accorded the same treatment as married people. . < Mr. Coates said he could not accept the amendment, but in cases of hardship people could appeal for exemption under existing legislation. He intimated that he would consider the whole question of exemptions. The amendment was lost by 39 votes to 23.

Mr. Coates, in answer to a question by Mr. Frhser, said cases of particular hardship would be assured Of attention. Referring to another clause regarding which Mr. HargeSt asked what the position of savings banks would be, the Minister said such banks would make representations to him to-morrow and if as a result amendments were made to the clause it would be re-committed to the House for Consideration.

On reaching Clause 7 the committee reported progress to enable the Local Authorities Reduction and Loans Conversion Bill to be brought in.

After this measure had been read a first time the House resinned with the committee stage of the Land and Income Tax Bilk A division without discussion took place on the clause which contains provision for the assessment of income tax on banks. The clause was upheld by 44 votes to 20. Mr. H. T. Armstrong (Lab., Christchurch East) objected to the last clause which provided that no person liable for tax could leave the country without first receiving a clearance from the collector, and Mr. Coates agreed to withdraw it. The Bill was read a third time and passed. The House adjourned at 11.40 p.m. until 10.30 a.m. to-morrow. In reply to a question by the Leader of the Opposition the Prime Minister said the local bodies conversion legislation would be the business for the day, and opportunity to discuss the unemployment report ■would be given before the end of the session.